Problems at Yahoo

Verizon’s Biggest Advantage in the Yahoo Bidding War

Four years into C.E.O. Marissa Mayer’s tenure at Yahoo, the turnaround strategy she was expected to enact to save the $35 billion Internet giant isn’t going according to plan. Instead, Yahoo put itself up for sale earlier this year. It’s seeking bidders for its core Internet business, which consists of its mail services, search features, and its media properties, and buyers could pay anywhere between $2 billion and $8 billion for them. Telecom giant Verizon is considered to be the front-runner, though rival AT&T is also said to be bidding.

Verizon may have a leg up thanks to Bank of America, a former Yahoo adviser, Reuters reports. Verizon is reportedly working with Bank of America and a number of other investment banks on its Yahoo bids, which could give Verizon some insight into the beleaguered Internet company, which has been tight-lipped about its finances. Last year when Yahoo explored spinning off its stake in Chinese e-commerce giant Alibaba, Bank of America was Yahoo’s lead adviser. Besides its “intimate knowledge” of Yahoo, Bank of America could also help finance a bid. Besides Bank of America, Verizon is also working with Allen & Company, LionTree LLC, and Guggenheim Partners. The second round of bids for Yahoo’s core Internet business are due on June 6, according to Reuters.

Presumably, Bank of America would have some conflict-of-interest measures in place that would preclude it from simply handing Verizon a complete rundown of Yahoo’s finances. But adding the bank to its team adds intrigue to a high-profile—and long-brewing—corporate narrative.

Other bidders include private-equity firm TPG, billionaire investor Dan Gilbert (who is rumored to have financial backing from Warren Buffett), and a group including Bain Capital and former Yahoo chief Ross Levinsohn, who left the company when Mayer took over a few years ago.

While the company has a $35 billion market capitalization, little is known about Yahoo’s real value. Much of its market cap comes from its stake in Alibaba, the Chinese e-commerce giant, and may not actually reflect the value of Yahoo’s own services. A Yahoo “sale book” given to potential buyers and looked at by Recode reportedly obfuscated whether parts of Yahoo were making any money at all. Verizon could use all the intelligence on Yahoo’s finances it can get from Bank of America.